PM urges world to think of 'debt-write offs' to help nations like Pakistan cope with virus

[HRK]

No one is going to waive off debt.

purpose of this statement is not to get debt write off, obviously International Financial Institutions and countries would not waive $ 100+ billion debt but it is just a preparation, a sort of building a case to seek financial relief like rescheduling of debt repayments probably from International Financial Institutions which as of December 31, 2019 were ~$ 36 billion and if we include debts from Paris club and bilateral debts then add another ~$ 24 billion ....

If this policy is persuaded rightly by Financial team in this time of crises it may win use few years of relaxation in debt repayment ....

 

[ARMalik]

You must be really stupid to think this is even slightly possible lol

I am sure You are better than this, so If you want to post here on my thread then use civilize language dude. Surely you have been bought up better than the stunt you just pulled here with your trash language.

 

[Jungibaaz]

Actually lot of Indian debt is actually tied up in those foreign reserves (NRI bonds/capital account) to begin with ... the yields are quite low because of trust in Indian economy+admin (and credit rating). This of course need to be improved lot more, esp if India is to transition to a more supply-side economy this decade...leveraging its ~ 2 trillion market cap.

The real issue for Pakistan on other hand is its market cap is 40 billion USD and that took a dip from 90 billion just a year or so ago. That means it can leverage on very little internally....its credit rating is junk too. Forex reserves are low and idle too, waiting for some sustained breakout somewhere.

Frankly, I.K admin is quite desperate if they are trying to ask for debt relief just because of corona....and it doesn't give a good look for investor and economic confidence either (which is what an admin/govt should focus on doing the hard but more permanent way). These two are important to get people to invest on their own dime and bear the risk themselves (rather than essentially tier-dependent "socialised" risk on Pakistan taxpayer/revenue like debt does in the end).

Its for this reason, that the govt should not have taken this decision to "urge" debt relief for Pakistan....because sympathetic ear erodes each passing cycle. You just got to pull your bootstraps up at some point and do the hard work in making Pakistan more attractive for business and genuine supply chain investment+integration etc.

Don't think anyone is going to re-package debt either because most have already done so for Pakistan (as much as they can I believe, but I could be wrong) and they want a good chunk of 5 - 10 year reforms in Pakistan first (to have Pakistan prove it is willing to do its side to improve its finances)....rather than be taken for ride in yet another typical cycle.

Like rest of region, Pakistan govt must look to get out of running businesses. Govts are very inefficient at that, its too much intervention at too much cost to rest of country.

@Chak Bamu @Socra @Jungibaaz

Good points. You’re absolutely right on all points. In Pakistan however, to add to your calculations, you need to imagine a country that is considerably less politically developed. Where institutions are weaker, and power is deeply concentrated and entrenched, even compared to India.

We still haven’t had Nehruvian political consolidation, land reforms etc. We’ve had on and off dictatorships, and we’ve had hybrid regimes comprised of military, feudals, and industrialists, together masquerading as democracy.

A member here once asked (validly IMO), whether a state development would suit Pakistan. These are state backed infrastructure and project finance banks that have sovereign guarantees. They work very well in Europe. I could give him a long speil about Pakistan’s sovereign ratings, market appetite for our notes vs supply, risk premiums associated with political and financial instability etc. All valid reasons why it wouldn’t work...

But there’s another much more trivial example of how such a project might not work as intended. In the early 90s, Nawaz Sharif undertook some energy infrastructure projects, including Hub power project near Karachi. It was well meaning and intended to reduce load shedding. But for these projects we needed international capital markets and relevant agencies/friendly nations to extend us loans. These loans would be secured on sovereign credit guarantees.

Ask any person who knows anything about state development banks, and they’ll say that the credit worthiness of a state development bank is primarily a function of a) which state it belongs, b) whether that state gives explicit hm credit guarantee or implicit. You do not even need a hard look at fundamentals of the company, this is usually the base analysis. E.g Kreditanstalt fuer Wedieraufbau (German state development bank), gets it’s creditworthiness as a function of German sovereign creditworthiness and an explicit guarantee. Right now KfW borrows at negative rates as a result.

Nawaz gave a sovereign guarantee for power projects and guess what happened? Federal Sharia courts (another blessing courtesy Zia ul Haq) ruled that the loans were haram, because they included interest payments. NS’ projects, financing plans, all were in deadlock, and his government’s own stability with religious allies was teetering. The matter was escalated to Supreme Court, who subsequently failed to resolve the issue and failed to uphold the guarantee. So what would our credit guarantees be worth to any investor in this case? They’d be worthless.

The point I’m making with this example is that a few well meaning politicians with good ideas aren’t enough in our case.

We have deep political and structural issues that have not been addressed since independence. We’ve had Governor General dictators, military dictators, hybrid regimes of civilians and military, and a few ailing attempts at democracy. The rot is just a symptom of deeper issues.

 

[Kambojaric]

Countries that have given loans are facing financial difficulties as well. Highly unlikely that they will be in the mood to forgive debts at such a time. Still its worth a try.

 

[Kaniska]

Technically, it is not a bad idea...If you think world as a global economic village beyond boundaries and any company that is bankrupt due to the issues which are nonorganic in nature, then they file bankruptcy to get the financial privilege. The underlying tone of filing bankruptcy is about stopping the failure of the organization that has provided enormous financial and social benefits to the society.

So if Pakistan can provide a positive outlook and its contribution to its financial stakeholders that any support to Pakistan's economy will provide bigger and tangible return to other countries, then it is better to try your luck rather than not trying anything....

Pakistan can transform itself to one of the few Muslim nations( Apart from Indonesia and Malaysia) who are not biased with any sect related rivallary while pursuing its foreign policy. Pakistan's close friend are Non Muslim countries like China and fully supported financially by Arabs in the time of need...

If Pakistan can device a statergy to assist China in generating enough revenue for its investment through CPEC, then it is worthwhile for Chines investor to provide some lineincy for debt recovery from Pakistan
Same goes for IMF too...IMF is like a bank...If Pakistan can pull in few smart diplomacts with economic advisors and provide a statergy such which are a combination of political and economic win to IMF as well as West, they may consider your offer in a positive way...

At the end of the day, it is all about what is offer from Pakistan that will force your stakeholders to provide some benifit to you in short term but get a better return in long run..

 

[Caprxl]

We have deep political and structural issues that have not been addressed since independence. We’ve had Governor General dictators, military dictators, hybrid regimes of civilians and military, and a few ailing attempts at democracy. The rot is just a symptom of deeper issues.

Nicely put & the solution to above part is ?

 

[Hakikat ve Hikmet]

PakBrother mine,

After giving blood sacrifice of 80k Paks... and a loss to PakEconomy of $220+Bln... APS!.... we are subjected to this unpayable burden...

We also need to take responsibility of the past two regimes... and their utter EconomicTerrorism as well...

DebtRelief is the key to kick start the GlobalEconomy as we are looking at a GlobalRecession...and actual growth can only come from AsianCountries... including India as well.

When this pandemic is over somewhere mid-next year... the world shall/might be looking rather different thatn today...

What we are looking at is the fact that the ruling Global Financial Architecture is getting stuck deeper...

G20/G30 need to come together and try to create New Financial Architecture that also takes into account the well being of the Rest and not just the CombinedWest!

Just have a look at the map.... Eurasia!

China, Pakistan, India, Russian, CARs, Turkiye, Iran, GCC and ASEAN... the combined output and populations... and yet we have NO Say in the current Financial Architecture...

Elimination of poverty is absolutely doable in the Eurasian landmass and Africa as well...

Anyhow, KhooniVirus is one catalyst. MarketMeltdown another... combined... they accentuate eachother... adding feul to the Momentum of History which is bringing I-turn-the-world-upside-down kinda changes...

Mangus

New World Order - thanks to the coronavirus....

But, world orders change only with wars....

The USA was the clear and present winners of the WW1 & 2, and Cold War......

Man proposes, GOD DISPOSES....

 

[Krptonite]

I personally think that this is probably once in a lifetime opportunity for Pakistan to do something about its foreign debt once and for all. If Pakistan can at least start some sort of negotiations with some friendly countries, example China, it will gain some momentum. When every Central Bank in the world is injecting billions and trillions into their economy, it is only fair that Pakistan be given some sort of debt break or relief or a combination of both.

That's a very idealistic viewpoint you hold, everyones hoarding resources, especially the state machinery.

A moratorium on payment seems plausible but outright write off is going to be harder to convince. No one wants to give up the income from the interest payments, and unless GoP provides other incentives, it's unlikely they will.

 

[Desi_Guy]

https://www.dawn.com/news/1541620/p...to-help-nations-like-pakistan-cope-with-virus

PM urges world to think of 'debt-write offs' to help nations like Pakistan cope with virus

"The world community has to think of some sort of a debt write-off for countries like us, which are very vulnerable, at least that will help us in coping with (the coronavirus)."

He also called for lifting sanctions against Iran, the epicentre of the coronavirus outbreak in the Middle East.

The premier sat down with AP at his office in Islamabad. He'd spent much of his day meeting experts about the effect of the coronavirus outbreak in Pakistan, which has confirmed 193 cases so far.

He said that if a serious outbreak of the pandemic happens in Pakistan, he is worried that his government's efforts to lift the ailing economy out of near-collapse would begin an unstoppable slide backward.

Exports would fall off, unemployment would soar and an onerous national debt would become an impossible burden. Pakistan secured a $6 billion bailout from the International Monetary Fund last year.

"It's not just Pakistan. I would imagine the same in India, in the subcontinent, in African countries," he said, referring to the virus.

"If it spreads, we will all have problems with our health facilities. We just don't have that capability. We just don't have the resources."

Most people who get the new coronavirus and the COVID-19 illness it causes experience only mild or moderate symptoms, such as fever and cough, and recover within weeks. But the virus is highly contagious and can be spread by people with no visible symptoms. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.

Lol how is he the head of a state? Countries dont run on emotions.

 

[HammerHead081]

Lol how is he the head of a state? Countries dont run on emotions.

Atleast he's not the killer of gujrat but your state head is befitting for your nation. A person who is a chaiwala and a killer being head of the rape capital of the world.

 

[Zulfiqar]

purpose of this statement is not to get debt write off, obviously International Financial Institutions and countries would not waive $ 100+ billion debt but it is just a preparation, a sort of building a case to seek financial relief like rescheduling of debt repayments probably from International Financial Institutions which as of December 31, 2019 were ~$ 36 billion and if we include debts from Paris club and bilateral debts then add another ~$ 24 billion ....

If this policy is persuaded rightly by Financial team in this time of crises it may win use few years of relaxation in debt repayment ....

Yes, rescheduling would be preferred. However, the finance team would have to be competitive to fight our case because the whole world would be lining up to the creditors to do the same. The creditors would be asking for a lot of documentation in order to justify our request relative to requests of other countries.

 

[Aspen]

What is baffling me is why Pakistan didn't ask for debt write-offs before Taliban deal was signed. It was the perfect opportunity and Pakistan missed it.

What did Pakistan get in exchange for bringing Taliban to the negotiating table with the US? I hope Pakistan didn't do it for free. We should've asked for some debt write offs in exchange for helping US with the peace deal. That opportunity is gone now. US needed our help and I think we did it without getting any concessions in return which was really stupid. If US said no to debt write off, we wouldn't have lost anything by asking anyway. Most likely they would have given us something since there was no way they could have gotten the deal signed without our help.

 

[Ahmet Pasha]

We need to jump on this and advocate for debt forgiveness

 

[HAIDER]

The only way for economic progress , otherwise this death trap will be more and more wide in future. When nation not will to pay tax .....

 

[A.A. Khan]

Imran Khan is getting mentally demented. He is surrounded by vultures who are chewing his political capital day by day. But then this also shows his decision making ability as well.
Firstly such a PM who can't control his own Finance Minister/Adviser/IMF mole Hafeez Shaikh and IMF agent Reza Baqir, how can he expect the rest of the world to help him.

The other adviser Zulfi Bukhari is busy fecilitating Coronavirus patients into the country from Iran.

A lot of capital of developed economies has been wiped out. Why would they help and why should they help a PM of Pakistan?

Paris Club is the biggest debtor of Pakistan
All Paris Club economies are facing devastation from coronavirus they will not reschedule debt.

Someone needs to guide him on External debt and economic function he is being grossly misguided or I'd say brainwashed on the issue of Foreign debt. Reza baqir and Hafeez Shaikh are taking him for a ride.
DEbt is not gloom and doom Greece and other countries have bigger debt to GDP ratio but their economies are not being contracted by IMF policies .

These 2 are running the show and making sure Pakistani middle class does not benefit anyway from the reduction in oil prices. IMF's war against Pakistani people continues.